Tuesday, October 26, 2010

The Unsaid

If you are going to participate in this democracy there are some facts you just have to know.

"Starve the Beast" is a policy strategy that when implemented, (tax cuts under President Bush for example), hopes to slash government by denying it money. A far more devastating form of the same policy is to create massive amounts of debt, generating the kind of fiscal crisis we now suffer, and limiting the governments ability to fund. Bush did both.
Grover Norquist, an architect of the Bush program, states his objectives: "Norquist favors dramatically reducing the size of the government. He has been noted for his widely quoted quip: "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."
He has also stated, "Cutting the government in half in one generation is both an ambitious and reasonable goal. If we work hard we will accomplish this and more by 2025. Then the conservative movement can set a new goal. I have a recommendation: To cut government in half again by 2050". The Americans for Tax Reform mission statement is "The government's power to control one's life derives from its power to tax. We believe that power should be minimized."
Norquist is the author of the book Leave Us Alone: Getting the Government's Hands Off Our Money, Our Guns, Our Lives,published on March 11, 2008 by HarperCollins. He has variously served as a monthly "Politics" columnist and contributing editor to The American Spectator." The above is a wiki citation.

Ed Gilgore, a democratic strategist, wrote in 2004 an article that set out the policy as it was being adopted by then President Bush.

Paul Krugman revisited the issue this year and threw down the gauntlet to republicans to name just where they would make the cuts they demand.

What Krugman didn't say, and no dem will admit, is that they have lost the political battle. Here is their problem in a nutshell: Having chosen to go along, in the name of bi-partisanship; funding the Iraq and Afghan war off the books, approving drug benefits to Medicare, and most egregiously, funding the bankers bailout, the dems have sealed their fate. In addition to all of that activity under Bush, the democrats were not going to curtail their agenda when they gained control. Health care reform, school reform, engaging the world in nation building, funding alternative energy R/D, bailing out Fannie and Freddie, are some of the programs we have watched them implement. The effect of all of this is to grow the debt and the national outrage against it. The bank appears to be broken on their watch. They are going to pay.

What neither party was ready to imagine was the extent to which the national bankruptcy is not a function of public policy but rather the wholesale theft of our treasury. Dan Froomkin's piece on Harvard's Neiman Watchdog gets at just one element of the theft, the mortgage fraud. It is exactly at this point that most eyes are going to fall off the page and it is for just that reason that readers must press on. You haven't heard too much re. this fiasco, you haven't heard nearly enough.
Here is a Slate article on the passing through of billions of taxpayer dollars to foreign banks.
Here is a statement on the same subject from the right.
These articles address some of the trillions of dollars that have passed from taxpayers to vested interests. These articles don't address the negative wealth effect of the blowup on the average citizen. Trillions of dollars of assets have evaporated in the form of securities losses and house values. You've seen the pictures of the gutted houses in city after city. You don't live in a slum. This doesn't effect you. On your next drive note the number of for sale/lease signs in your neighborhood commercial district to get a since of the scope of the problem. This does affect you. The pic at the top of this post is but a segment of Domino's world headquarters. It is for rent.

This excerpt from Elizabeth Warren corrects some of the newspeak out there:
"Through it all, families never asked for a handout from anyone, especially Washington. They were left to go on their own, working harder, squeezing nickels, and taking care of themselves. But their economic boats have been taking on water for years, and now the crisis has swamped millions of middle class families.
The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Consumer banking -- selling debt to middle class families -- has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.
And when various forms of this creative banking triggered economic crisis, the banks went to Washington for a handout. All the while, top executives kept their jobs and retained their bonuses. Even though the tax dollars that supported the bailout came largely from middle class families -- from people already working hard to make ends meet -- the beneficiaries of those tax dollars are now lobbying Congress to preserve the rules that had let those huge banks feast off the middle class.
Pundits talk about "populist rage" as a way to trivialize the anger and fear coursing through the middle class. But they have it wrong. Families understand with crystalline clarity that the rules they have played by are not the same rules that govern Wall Street. They understand that no American family is "too big to fail." They recognize that business models have shifted and that big banks are pulling out all the stops to squeeze families and boost revenues. They understand that their economic security is under assault and that leaving consumer debt effectively unregulated does not work.
Families are ready for change. According to polls, large majorities of Americans have welcomed the Obama Administration's proposal for a new Consumer Financial Protection Agency (CFPA). The CFPA would be answerable to consumers -- not to banks and not to Wall Street. The agency would have the power to end tricks-and-traps pricing and to start leveling the playing field so that consumers have the tools they need to compare prices and manage their money. The response of the big banks has been to swing into action against the Agency, fighting with all their lobbying might to keep business-as-usual. They are pulling out all the stops to kill the agency before it is born. And if those practices crush millions more families, who cares -- so long as the profits stay high and the bonuses keep coming.
America today has plenty of rich and super-rich. But it has far more families who did all the right things, but who still have no real security. Going to college and finding a good job no longer guarantee economic safety. Paying for a child's education and setting aside enough for a decent retirement have become distant dreams. Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.
America without a strong middle class? Unthinkable, but the once-solid foundation is shaking."

These statements serve her interest, validating the agency she intends to create. What she can't do is claw back the money that was stolen. She suggests that we need to regulate to keep them from doing this again. There is no "again". It's done. There is no capital, there is only debt finance. All of the loans made since 2007 are on leveraged funds. Government funds. And lending institutions are not going to lend these monies if they fear the collapse of the dollar (in which the loans are denominated) or that interests rates will rise (which they must). The impact of all of this is that whichever party ascends to power they are powerless to offset the damage. The republicans have their wish, the beast is starved. Now the question is, how do you run the government, any level of government with no money? Here is the brit's solution. (FYI, Quango=quasi-autonomous non-governmental organisation). A corporate state. We are heading in the same direction.

1 comment:

  1. Said